Ben Thomas is a commentator and public relations consultant who has worked on both government and private sector projects, and for a minister in a National government. He is a regular contributor to Stuff.
OPINION: 2022 was the year I resolved to, and then just as suddenly decided not to, become a crypto millionaire.
I met a graduate who was tossing up whether or not to take up a sought-after entry-level position at a prestigious professional services firm, because since finishing his degree a few months earlier he had made over a year’s salary simply by dropping without fanfare a hastily assembled NFT (non-fungible token) line (digital tokens tied to artwork) on to social media channels he frequented.
Of course, I had read about the case of the 20-year-old Hamilton man who allegedly raised over $100 million auctioning off crude, pixelated drawings of monsters related to a game he was developing, leading to accusations he was a “scammer” and guilty of “scum behaviour”.
I had seen squirming celebrities trying to act as if they loved the childlike “bored ape” images they claimed to have paid hundreds of thousands of dollars for.
* Waikato 20-year-old’s $103m NFT scheme causes controversy in gaming world
* The frame: What are NFTs anyway?
* NZ musician shocked to find his album art being sold as an NFT on US website without permission
* Picasso heirs launch digital art piece to ride ‘crypto’ wave
* The Detail: NFTs – What are they and why is this new technology taking the internet by storm?
The lack of any easily intelligible link between the artistic merit or real world utility of a NFT and its price meant money was being sprayed around indiscriminately.
Then the bottom fell out of NFTs (although many still trade at impressive prices) along with the cryptocurrencies whose distributed technology supported them: culminating in the apparent billion-dollar fraud and insolvency of the world’s second-biggest crypto exchange, FTX, which was revealed to operate as essentially a gigantic Ponzi scheme.
Why did so many people fall for it? A popular explanation was that millennials and zoomers, feeling locked out of traditional assets such as the family home and investment properties by ballooning prices, saw cryptocurrency and NFTs as their opportunity to be in on the ground floor of an ever-growing asset empire.
Which makes sense as far as it goes, of course, but suggested a follow-up question: why would they think that investing in ultimately worthless lines of code was a one-way bet? It’s easy in hindsight to pity or sneer at those who lost their savings on overpriced junk, but the answer is itself straightforward – because that is what had been modelled for them by central governments and central banks in relation to the asset classes owned by their parents.
As house prices spiralled in 2020 the prime minister continued to confirm she would seek to prop up “sustainable” increases, because “I think people expect to see that in the market”. Throughout the 2020 election campaign Jacinda Ardern rejected trying to bring down or even hold house prices steady. Encouraged by this implicit guarantee and almost free money on loan from banks, house prices rose even more in a frenzy.
Politically this made sense. Homeowners are still the majority of the electorate, although the proportion is falling. And thanks to the fiscal and monetary response to the Covid lockdowns, in the heady days of late 2020 and early 2021 it was possible to believe that by shutting down the border and the economy we had been saved from the worst effects of the virus and, counterintuitively, come out better off financially than before, and that we had the Government to thank.
Then inflation returned with a vengeance to spark a cost of living crisis. Higher interest rates mean homes falling in price while repayments rise, stinging those caught on the bottom of the housing pyramid scheme in late 2021.
The Labour government, like others around the world, can legitimately claim that inflation is a problem throughout many similar countries, and has at least some global causes such as the energy shock brought on by war in Europe. This only serves to illustrate, however, the limits of the Government’s power to solve individuals’ problems, try as it might.
A clear sentiment that emerged in research conducted for the Auckland mayoralty (I headed campaign media and communications for the successful candidate, Wayne Brown) was that the electorate has grown wary of big “game-changing” promises and grand visions.
This could presumably be traced back in part to, for example, the utter failure to get big, but poorly thought-out, projects for the city off the ground. The city’s light rail project, which then-opposition leader Ardern promised would reach Mt Roskill by 2021 and the airport by 2027, is yet to have a business case approved, let alone a shovel in the earth, and the Government humiliatingly capitulated on KiwiBuild targets after reaching barely 1% of the number of promised homes. Much, however, is attributable to the hangover from the pandemic’s giddy fiscal high.
In 2023, political parties on the campaign trail will need to bear in mind that voters are newly sceptical of being promised something for nothing. And that if they were planning on fundraising by releasing NFTs, they should go back to the drawing board.